Income protection policies are useful insurance products that cover your regular income in the event of sickness or injury, preventing you from working. This is a true lifeline for many people as it allows them to pay their bills and maintain a quality standard of living even when they can’t work. In essence, it removes the fear of financial instability in the event of an accident, injury or illness.
If you have any outgoing expenses, bills or obligations then it doesn’t matter if you are young, old, healthy or ill. There is no way of knowing if you will be debilitated by illness or injury. Even with savings, there is no guarantee they will last you throughout the duration of your downtime. This is why business income protection is such an important type of insurance. It keeps you afloat when you need it most. WIS Business Protection are experts when it comes to protecting your income. To find out more about what we do read about us here.
Even with state benefits or statutory sick pay, most people would struggle to get by or even cover their living expenses with what is made available to them. So, to ensure that you can maintain the same standard of living as before, business income protection insurance is vital.
There are a lot of intricacies that go into income protection insurance. The most commonly asked question is, “how much of your income does income protection cover?” This article is going to outline the answer to that question. We will also provide a general overview of income protection and how it works.
How income protection works
Income protection insurance is a useful product for individuals that are employed by a company or self-employed. For a monthly or annual premium, you receive tax-free monthly payments that cover your outgoings in the event of illness or injury that prevents you from working.
Using income protection is an effective way to cover all outgoing expenditures such as bills or mortgage payments. This lets you focus on getting better without worrying about the financial burden that not working might bring.
As an insurance product, income protection is used when you need it. It is a very successful type of policy that is almost always paid out in full. Provided you are transparent with your insurer when securing a policy, there is little risk of losing out. Income protection policies might even include additional services for free. This includes physiotherapy or counselling to help you recover from your illness or injury.
How much of your income does income protection cover?
Loosely speaking, income protection can cover you for around 70% of what you would normally earn in a month of working. It is an excellent way to replenish any lost income as a result of not being able to work.
Payment of income protection
When claiming income protection, most insurers will look at what is causing you the inability to work. In cases where there is a medical condition, insurers almost always payout regardless of what the medical condition is. So, if you are a pianist with a broken finger you will no longer be able to play the piano. Your income protection provider would almost certainly payout for this type of claim. Other scenarios, such as incidents of stress or mental health conditions, are also commonly paid out.
If you cannot work for a non-medical reason, such as unemployment or redundancy, insurers are much less likely to pay out. There are specific insurance policies that do cover redundancies and unemployment. But, generally speaking, income protection is not one of them.
The importance of income protection insurance
Financial experts suggest that individuals should have enough savings to cover at least three months worth of expenses to cover unexpected loss of income. The reality is that a large chunk of the population lives payment-to-payment, which leaves a lot of people vulnerable. Even with a good portion of savings, there is no guarantee it will last the duration of an illness or injury. Moreover, hard-earned savings are ideally used elsewhere, such as on the deposit of a home or a family holiday. Business income protection ensures that your savings are covered alongside your living expenses.
Income protection policies give you the freedom to keep your savings safe. There is no need to use them to keep afloat during financial difficulties as a result of illness or injury. Moreover, if you have hefty monthly bills or mortgage payments, income protection ensures that those are paid even if you cannot work. Without income protection, your way of living could be under threat if you are too sick to work or injure yourself and can’t work.
If you are looking for income protection insurance, check out the available policies today at WIS Business Protection.